FAQ About the Space Village Concept

I recently pitched the Space Village Company to a friend of mine in the commercial space world. He had a lot of very basic but very good questions. Here are the answers to his questions, plus a few more he didn’t ask:

What are the dimensions of the first Space Village? How big is it?

A cylinder 112 meters in diameter and 56 meters in length.

There will be ten concentric cylinder decks. Most decks will be spaced about 5 meters apart except for the inner most decks. The gravity at the outermost cylinder (deck 1) is equivalent to Earth gravity (1g). Gravity decreases the closer one moves to the center of the Village. Deck 8 has Martian gravity, Deck 9 has lunar gravity and Deck 10 is basically a big gymnasium-sized room with zero gravity in the center.

I’m planning for an atrium that cuts through the residential and green space decks (2 through 6) to give it some more airiness.

How many people will it support?

The first Space Village will have a capacity for 500 human beings.

Roughly 230 of them will be ‘crew’ necessary to maintain the facility. The remainder can be revenue-producing occupants. Maybe tourists, researchers, manufacturers, hotel operators, etc.

$1.5 billion. At 17 metric tons per person, the entire structure will mass 8500 metric tons. At $70/kg to LEO, launch costs alone will be $595 million. Round up to $600 million and double it to account for construction/fit-out/start-up costs. Then add a 25% contingency factor.

R&D costs (as well as about a million others costs, like financing) are not included in this estimate because it’s assumed the R&D will be paid for separately by commercializing R&D as its created as well as other sources (e.g. govt partners and perhaps other strategic partners).

The $70/kg price is derived from SpaceX ITS launch estimates. SpaceX estimated it will send one kilogram to the surface of Mars for $140. I took that number and cut it in half to estimate the cost to LEO.

Obviously this is all very hand-wavey. On the other hand…SpaceX, Blue Origin, the Chinese and a few others all seem deadly serious about dramatically lowering the cost to orbit. Price to orbit will continue to fall. If or when it hits $70/kg, I couldn’t say.

The 17 ton per person number is derived from Al Globus’ research. That number as well as more detail into all these numbers, will be chronicled in our upcoming book. Stay tuned.

How will you make money? What is the value proposition?

Free space settlement will be a real estate business. The Space Village Company will be both a developer (selling condominium units inside the settlement) and a landlord (renting space it keeps). At first the Space Village Company will maintain the common areas (as well as common services like life support, waste recycling, port management, thermal control, orientation, etc) but eventually something like a condominium association or a business improvement district may take over these essential duties.

The Space Village Company may also retain the earlier revenue streams (that supported R&D before the settlement is built) or it may spin them off to focus solely on construction of settlements.

How might an investor make outsize returns?

Because the Space Village Company will be a real estate business it will have the ability to pre-sell residential living units (and commercial offices/workshops) at a drastic discount to early, accredited investors. Or, similarly, it might pre-sell a portion of time – say a week’s vacation – at a drastic discount to an early adopter. Let’s see how this might work.

If transportation to space gets really inexpensive – e.g. about $70/kg to LEO or “full fare economy,” as Elon Musk predicts – then there will be demand from hundreds of thousands, if not millions, of people to travel to the Space Village. The Space Village Company will sell at least 250 single-occupancy living units or ‘space condos’ (or some combination of single and multiple occupancy units with a total capacity of 250 people). The Company will retain ownership of 20 single-occupancy space condos and rent them out to provide an ongoing revenue stream for the Company itself.

If the total cost to construct the Space Village is $1.5B, that means each of those 250 units must sell for at least $6M for the Space Village Company to break even on construction costs. Note that this does not include sales of commercial workshop space or other areas on the structure that could also generate revenue. For now I focus just on the residential units.

If a buyer pays $6M for a single occupancy space condo their monthly mortgage amount (at 7% for 30 years) would be about $39,000. Assuming a $30,000/month condo association fee (to pay for life support, etc.) that’s $69,000/month carrying cost for the living unit. Note: The condo association fee is a rough guess at this point. Also, I don’t expect early adopters to get a mortgage; they’ll probably be uber-rich folks who pay cash. I just use the mortgage numbers as way to illustrate what the cost might be.

The owners of these units could rent them out to recoup their investment. It currently costs about $45,000 to climb Mount Everest. This seems like a comparable price point for a week’s vacation in space. If lodging for the space vacation costs $39,000, then a person “airbnbing” their space condo could make $156,000/month revenue or 87,000/month profit. If the total cost to the traveler is $45,000 then their ticket to travel back and forth to LEO is $6000, which is pretty close to $70/kg or Musk’s “full fare economy.”

Where do the outsize returns come in? The Space Village Company could pre-sell a number of space condos, or chunks of time in space condos retained by the Space Village Company, at a steep discount. Once the Space Village is up and running these discounted products could later be sold at a high profit. For instance, instead of selling a space condo for $6M, early on the Space Village Company might sell it for $6000. Once the Space Village is built and operating, the investor would then sell their $6000 investment for $6M, making a 1000% return. Or, instead of selling a week in space for $39,000, the Space Village Company might sell it for $100. The investor could then sell that week in space later on for the regular price of $39,000, setting herself up for a potential 390% return.

Obviously, these early adopters will be taking an enormous risk. It would probably be best to limit those allowed to invest to accredited investors who understand the challenge and are willing to take a risk on an untested idea. Building in space is extremely difficult. Nothing on the scale of the Space Village has ever been built in orbit. In fact, there is no guarantee at all that transportation costs to orbit will fall to the point that the Space Village will become feasible. Therefore, it is very possible an early investor will lose their money. Caveat emptor.

Another thing: this discounting process will not raise really big dollars. It will probably only raise hundreds of thousands to a few million dollars, depending on how many space condos and chunks of time the Company is willing to sell at a discount early on. The Space Village Company will need traditional angel/VC/equity/debt investments, as well as government contracts/partnerships, to be truly successful.

The Space Village Company will also likely develop new technologies and other intellectual property that may become quite valuable on their own.